Senate Hearing On A New Digital Commodities Bill Has Far-Reaching Consequences

This Thursday, the U.S. Senate Agriculture Committee will hold a legislative hearing for S. 4760, the Digital Commodities Consumer Protection Act of 2022. Introduced on August 3, which is a little over a month ago and during a time of minimum activity on the Hill during the doldrums of summer, the DCCPA will likely erupt for the crypto industry after Thursday, with the prospect of a markup hearing that represents the final stage for a bill before it could be voted out of Committee and held to the Senate floor.

A last-minute calendar change moves the Senate Agriculture hearing from Wednesday at 10am ET to Thursday at 10am ET. While purely speculative, this Thursday time slot happens to be at the exact same time that Chairman Rostin Behnam of the Commodities Future Trading Commission (CFTC) will be testifying as Chairman Gary Gensler of the Securities and Exchange Commission (SEC).

As if this time change evens the playing field so neither agency Chair has the benefit of studying the other Chair’s testimony, this Thursday has suddenly become the Super Bowl of crypto regulation in 2022. Each knows that their testimony at this time will have a large impact on how the laws that could be eventually enacted regarding crypto regulation are ultimately shaped, and whether their agency will either gain or lose this new emerging technology marketplace that appears to many as the future of finance.

For the Senate Ag Committee hearing, the DCCPA has a great deal of support both from the Senate Agriculture Committee and the bipartisan nature of the co-sponsors. Chairwoman Debbie Stabenow (D-MI) and Ranking Member John Boozman (D-AR) of the Committee are both co-sponsors, which is one primary reason why the bill that favors the CFTC gaining more oversight of the crypto markets has such a good chance of at least making it to a vote on the Senate floor. The two additional co-sponsors are from both the far left and far right of each party, with Senator Cory Booker (D-NJ) and Senator John Thune (R-SD) showing their support of the DCCPA. To put a sweetener on this, Thune happens to be the second-highest ranking Republican in the Senate, and Chair Behnam happens to have worked on Stabenow’s staff prior to going to the CFTC, giving the DCCPA a definite edge over other bills on crypto regulation that have been introduced.

A panel of expert witnesses makes up the second part of the hearing, Ms. Christine Parker, Vice President, Deputy General Counsel of Coinbase, Ms. Sheila Warren, Chief Executive Officer of the Crypto Council for Innovation, Chief Executive Officer Denelle Dixon of the Stellar Development Foundation, and former CFTC Chair Heath Tarbert, who serves as the Chief Legal Officer of Citadel Securities. Finally, Todd Phillips, the Director of Financial Regulation and Corporate Governance at the Center for American Progress will be providing testimony. Phillips co-authored a detailed paper in March 2022 titled, “Congress Must Not Provide Statutory Carveouts For Crypto Assets” and has advocated for legislation that fills in the regulatory gaps for crypto instead. With the DCCPA creating the regulation of the spot markets for crypto assets, the assembled panel may all find themselves in agreement on this specific bill, even though there is a mix of industry and a consumer protection group on the same panel.

Details of the hearing are available here and at a minimum, for those following crypto policy, one can expect a very interesting discussion as the course of crypto regulation seems to be getting somewhat clearer. This hearing is definitely representative of a crossroads for the crypto assets industry and how involved the U.S. will be, whether as a leader or a follower, for what could be the leading asset class for the future of finance in the 21st century.